X&M Suppliers explains to GBR how the company intends to rapidly expand its offering and its reach from Abidjan to the rest of West Africa.
Can you provide a brief overview of X&M’s focus for 2017 into 2018, and highlight any recent milestones achieved by the company?
X&M supplies equipment in the areas of exploration, drilling, health and safety, construction, topography and software in West Africa and beyond. We are continuing to develop our capacity in three main areas: local manufacturing, distribution, building consignment agreements and partnerships with companies trying to enter the West African market. X&M also develops services capacity for the many brands it distributes such as Draeger. For example, X&M just set up a certified calibration lab in Abidjan for gas detection devices. Up to now, customers were forced to send their gas detection device to Europe or South Africa to be calibrated. Our business will continue to focus on quality products and services of the type our customers in West Africa are seeking. X&M is on its way to becoming a one stop shop supplier, supplying clients from large stock holdings held locally in a bonded, customs cleared warehouse or sourced and delivered directly from the manufacturer. One aim in 2018-2019 is to open offices in Burkina Faso, Mali, Ghana and Senegal to service the exploration, mining, oil and gas, and other industries in those countries and the region. This year we have established a presence in Hong Kong to source and develop procurement out of Asia.
What strategy does the company have in place to grow its business in the medium-to long-term?
One pillar of our business model is to partner with foreign manufacturers/suppliers who are eager to enter the growing West African market. Entering new market regions can be very costly, time consuming and difficult for foreign companies. X&M offer a reliable base for them to come in with consignment stock, or as partners, and then develop a marketing and sales strategy across the region. Our aim is to create a cluster of partners to expand product and service availability across West Africa. We can share our local knowhow and client relations with new entrants, and we offer regional knowledge of transport and logistics, reducing a partner’s risk solely to their consignment stock. We have already initiated two successful partnerships of this kind with Australian companies, namely AMC drilling fluids and Ore Research and Exploration (OREAS CRMs), and we will continue to encourage this form of cooperation in the future, which has proved to be very successful with win-win outcomes. We have developed a unique business model, which has proved an average yearly turnover growth of 120%, entirely self-financed. Imagine what we could achieve with access to capital? My main focus as the CEO of X&M in the next 2 to 4 years is to transform X&M into a West African giant. We are currently looking at various funding options to underpin our aggressive West African growth strategy, which we forecast will cost us between 7 to 10 million USD.
How will this investment contribute to your strategy for expanding your regional presence?
This investment would allow us to grow our stock of supplies, develop new lines of products and services, manufacture new products locally and internationally, employ new talents to join the team, open offices in Burkina Faso, Mali, Ghana and Senegal, buy property to build our warehouses and offices in various countries, and much more. West African banks have very little appetite when it comes to financing businesses, which is the reason X&M is now looking for foreign investment. Financing partners will also bring experience, network, and finance knowledge which will help us structure our business to grow to the next logical stage building off our experience, knowledge and track record of success to date.
How would you describe your current international client-base, and what strategy will you employ to continue to attract new customers?
Our international customers come mainly from Europe, Australia, South Africa and Canada. We are also starting to diversify our portfolio and sell into other sectors. For example, we are increasing our clients in the Oil and Gas sector as well as in the agri-business. Our strategy is to bring in more brands that are transferable across different industries and broaden our services so that we are less vulnerable to the volatility associated with the exploration and mining sector. There is a real demand nowadays for a reliable supplier that can provide good quality products as well as solutions to client’s challenges. There are many synergies and commonalities between these industries, for example all make use of personal protection equipment, safety and survey tools and equipment.
Our current clients are some of our best sales staff as their word-of-mouth endorsements have helped spread our reach across West Africa, aiding the work undertaken by our small sales team and our company website. We will soon expand our internet presence, revamping our website, using professional social media and mass communication mailing to advertise our products and services. These tools are rarely used by companies in West Africa but they are becoming very effective means to attract new clients and to generate repeat business. A focus throughout will be to maintain high quality services as this is what brought us to where we are today.
How does X&M navigate the logistical challenges of operating in West Africa while still delivering optimum value to its clients?
X&M is involved in the entire process from beginning to end through our dedicated transport and forwarding department that allows us to provide real expertise in sales and customs procedures. We do not hand off entirely our products to forwarders. We transport goods from anywhere in the world directly into Africa without necessarily passing through Côte d’Ivoire. Furthermore, we coordinate importation documentations required from the various countries involved to ensure our clients receive their products in an efficient and timely manner. Logistic is a real challenge in West Africa and is a field where we will invest further in order to quickly and efficiently move goods around the region. The Côte d’Ivoire government has stated a commitment to reducing the country’s dependency on cocoa by developing the mining sector.
What are the challenges of operating in a country where mining is not a historical focal point?
A concern for businesses in Côte d’Ivoire are the constraints placed on them by the local banking system. Service is often poor, wire transfer long, customer relations nonexistent and it is not possible to hold accounts in different currencies. To give you an example, an international bank transfer can take up to seven days. Logistics can also be a problem if you do not have the right relationships and fail to follow what forwarders are doing. However, I believe that challenges also represent opportunities in Côte d’Ivoire, chiefly because there is significantly less competition than in the developed world and because everything is still to be done. These perceived barriers to entry result in less competition, and X&M offers very specific regional expertise that we believe will interest international groups who would like to enter the rapidly growing West African market. For a long time, companies were looking at the region from a distance. Now, due largely to the limited growth rate in developed countries, Africa is of increasing interest because countries are seeing high growth levels of between 4-10%. The West African market is still evolving and growing, so the first suppliers/manufacturers entering the market should have the best opportunity to establish a significant share of it. West African countries are growing their economies whilst also diversifying into new industries, and this transformation drives an increase need for quality equipment and consumables.The Cote d’Ivoire Government has been proactive in developing the mining sector in recent years. Operating in the Cote d’Ivoire is easier than in many other countries in the region, due to its port and railway facilities, status as a regional airline hub, combined with its liberal and pragmatic approach to foreign investment, especially within the mining sector. All of this bodes well for the future of X&M as we look to grow our business in support of our clients business partners and stakeholders.
Source: Global Business Report - GBR - MAGIC INDABA - Interview: Lindsay Davis